Lawyers, financial adviser tab hits $61M in Exco Resources bankruptcy
In the 18 months since oil and gas production operation Exco Resources filed for Chapter 11 protection under the U.S. Bankruptcy Code, it has paid the lawyers and other restructuring consultants $61.6 million for their expertise, according to research by The Texas Lawbook .
The final bill will likely be well north of $75 million, according to lawyers involved in the matter — and that’s if Exco’s proposed exit plan, filed this month, goes smoothly.
Court records for Exco, which filed to restructure in January 2018 in Federal Bankruptcy Court in Houston, show just how complex and expensive corporate bankruptcies can be. For example:
• A dozen law firms involved in the Exco bankruptcy have charged $39 million so far for their services.
• Fifteen financial advisory, accounting and consulting firms have been paid $22 million.
• Nearly three-dozen of the lawyers and other professionals working on the bankruptcy are charging Exco more than $1,000 an hour.
• More than 100 other legal and financial advisers involved are billing at hourly rates of between $300 and $1,000.
“Corporate restructurings have gotten so expensive that companies cannot afford to go into bankruptcy anymore,” says former American Airlines General Counsel Gary Kennedy, who guided the world’s largest airline through Chapter 11 five years ago.
While the $61.6 million price tag is hefty, it pales in comparison to the $700 million in fees Energy Future Holdings paid its legal and financial advisers in its four-year bankruptcy odyssey, which ended last year. The fees paid to the lawyers and consultants in the Enron Corp. bankruptcy also topped $700 million. American Airlines paid its advisers more than $200 million during its restructuring.
The winner for most fees in the Exco bankruptcy is Kirkland & Ellis, which has offices in Houston and Dallas.
Exco Resources General Counsel Heather Summerfield hired Kirkland, which is widely considered to be one of the premier corporate bankruptcy law firms in the world – and one of the most expensive – to lead the exploration and production business through the maze of creditors and restructuring.
Exco officials did not respond to calls and emails seeking comment.
Exco paid Kirkland a $3.88 million retainer, according to court records. Between January 2018 and April 2019, Kirkland has billed its client $19.6 million in legal fees and expenses.
Bankruptcy records show that Kirkland has had 40 different lawyers work on various parts or elements of Exco’s restructuring, ranging from the bankruptcy proceedings and litigation to environmental and tax law.
Sixteen of the Kirkland lawyers charge $1,000 or more per hour. The two lead Kirkland lawyers for Exco are Christopher Greco, a bankruptcy partner in Kirkland’s New York office, and Patrick Nash, a bankruptcy partner for Kirkland in Chicago. Nash bills $1,565 an hour, while Greco charges $1,295 an hour.
The most expensive lawyer representing Exco is Kirkland tax partner Todd Maynes, who has an hourly billing rate of $1,725. Fortunately for Exco, he’s only worked on the case for a handful of hours, according to court records.
Twenty-three Kirkland lawyers working on the Exco restructuring are based in the firm’s Houston offices. Kirkland litigation partner Anna Rotman ($1,235 an hour) and corporate partner Andy Veit ($1,225 an hour) of Houston have spent well over 100 hours each working on the Exco bankruptcy.
Kenneth Young, a litigation associate in Kirkland’s Houston outpost and only six years out of law school, has worked about 100 hours on the Exco case and charges $950 an hour.
The Houston office of Jackson Walker and New York-based Brown Rudnick are lead counsel for the unsecured creditors. Exco also pays their bills.
Brown Rudnick, which has four partners charging $1,000 or more, has charged $7.74 million for its work on behalf of the creditors. Jackson Walker has billed Exco Resources $2.6 million.
Exco hired Alvarez & Marsal to lead is corporate restructuring process. As of April 30, Alvarez has charged $7 million for its efforts. The Alvarez team is being led by Managing Director John Stuart, who charges $975 an hour, and Senior Director Peter Mosley, who bills at $800 an hour. Both are based in Dallas.
FTU Consulting, which is the lead financial adviser for the creditors committee, has charged Exco $4.2 million.
For a longer version of this article, please visit TexasLawbook.net.